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Stop Cutting Prices! Retain Customers with Value By Dr. Lucia Kelleher
08/05/09

A company’s value proposition can’t be carved in stone; it must be flexible and adaptable. The value you offer to customers is constantly changing, whether intentional it to or not.
The challenge you face in business is ensuring that a large percentage of your customers, and particularly those customers who are critical to your long-term success, view your value proposition consistently and as intended, and that they see real value in it.

The customer’s perception of value is individualized and dependent on context and circumstances. What to one customer represents great value is to another a waste of money. What customers perceived to be great value in early 2008 may not represent the same value a year later.

What is Value Today?

In troubled economic times, many consumers will forgo a holiday or delay buying a new car, but they will retain a few items on which they are not prepared to skimp. Last week, while I was having my hair cut, Jennifer observed that her business was practically “recession proof.” Her salon has experienced an increase in business in recent months, as many people turn to a new hairstyle and manicure as one means of coping with the downturn in their investments. For some of the same reasons, sales of books are up, as are those of movie rentals and movie tickets. Suddenly, consumers perceive greater value in these purchases than they do in others.

Value perception is not always predictable. Where consumers perceive value is a fascinating study. Businesses need to explore the concept of value more deeply so as to better understand what customers consider valuable to them.

Most customers have a much more complex definition of value then many business decision makers seem to give them credit for.
Now is not the time to diminish the value that is inherent in what we offer customers. In fact, we need to find ways to add even further value to compensate for the fact that most consumers are today much more value conscious due to economic downturn.

Dropping prices is the easy option, as is the offering of deals or specials. The world is full of these right now. But hidden amongst the flyers and screaming TV ads from big box electronics retailers are dozens of independent retailers who haven’t dropped their prices and haven’t been drawn into the orgy of price cutting, who quietly continue to offer good prices, loads of advice and superb service.
These independents understand that their future depends on their ability to create customer connection by offering more than a great deal. They will go out of their way to accommodate customers with respect to delivery times; offer to consolidate their many TV/video remotes; continue to send technicians to customers’ homes rather than defer to manufacturers’ warranties. In short, they make it easy for customers to see their added value.

Most customers have a much more complex definition of value then many marketers seem to give them credit for. Customers have a unique and personal view of value; they see value in more than product and price. Customers currently have less to spend, but they will spend their smaller discretionary budget where they feel they get the best total value. This doesn’t mean opting for the lowest price.

Delivering more value means getting creative and looking for ways to add what the customer will appreciate and will take his or her eye off price. For example, I was in a specialty food store last month and asked a salesperson for a particular brand of olive oil that I had bought in the past and especially liked. They did not stock that brand, but the extra-helpful employee said he would contact their wholesaler and would have it in the store for me in a couple of days. He said they would call me when it arrived. Did I ask the price? Of course not!